The Forsyth formula

comes to the aid

of the parties

 

John Forsyth

 

The Sir Christopher Kelly proposals on funding of political parties was published last month after many months of deliberation. 'Political party finance – ending the big donor culture' maintains a dogged insistence that in the end there will have to be some system of state funding to keep them alive between elections despite the collapse of individual party membership.
     It reminded me that I sorted it all out in less than an hour three years ago. I jotted down a scheme that squares the several circles of the current debate. It deals with transparency, foreign donors, trade union funding and corporate donation caps by making matters simpler rather than more complicated. In addition it resonates with the wider search for positive promotion of active British citizenship.
     It also takes heed of the public scepticism that the way to do away with the appearance of cash for honours/influence is to set up a system of state funding that will bankroll the very parties whose misconduct and flawed administration has prompted the need for change in the first place. In those far off days I was gallus enough to send my scheme to Gordon Brown, Ken Clarke and Simon Hughes. I got an acknowledgement from Ken Clarke. Undeterred by their callous indifference I guess I'll send it to Sir Christopher Kelly now, but the readers of the Scottish Review may see it first. This system would be radical and innovative and could transform the relationship between voters and the political process.
     The simple proposition is that parties should in future be funded solely by support from an individual citizen's 'opt in' to a flat rate political levy – say 0.1% or some other agreed figure of their tax liability – administered through the personal tax system. It wouldn't cost the individual anything because the levy would come from his or her liability. That is the nearest I get to state funding.
     I can claim only 'O' Grade arithmetic but I can see that the HMRC reports 30 million taxpayers paid £153bn personal tax between them last year. A 0.1% rate would put £153m up for grabs. If two thirds of the taxpayers opted-in, the £100m pot isn't so far away from the total achieved by the political parties last year, as reported by the Electoral Commission. Each individual would have the right to advise HMRC on their tax return or through PAYE to which political party he wished his levy to be paid that year. Those among us who are over 18 who are not in work and claiming benefit should be included on an equal basis of citizenship by incorporating the levy into jobseekers' allowance or disability benefit or whichever other benefit is the main form of income. A similar arrangement could be made for students in full-time education.

 

     It would not be compulsory for any taxpayer to pay the levy but as it will cost them nothing there would be a certain joie de vivre in ticking a box. There aren't many boxes on the form that claim that. The HMRC would gather the funds and disburse them accordingly. From the point of view of the individual, opting in to this system would be a demonstration of active citizenship. The state would be acknowledging this by making the levy deductible before tax. It will be the challenge to each political party to address the voters as individuals and persuade them to steer their opt-in in their direction. In this way fundraising remains entirely the responsibility of the parties, not the state. The individual would be required to renominate his beneficiary in each tax return.
     Transparency? This system gets round the issue because it will make all donations anonymous.
     Foreign donors and non-doms? The opt-in will only be available to be drawn from an individual taxpayer's personal tax liability. By definition this will exclude all non-UK taxpayers at a stroke and remove the impossible requirement for political parties to authenticate and validate political donations. It will also put an end to the unseemly custom that has arisen for elected politicians to double as part-time hustlers whenever they meet anyone with money. Or scanning the press for Lottery winners.
     Cap on donations? There will be no need for an arbitrary cap if the system is anonymous and based on personal tax liability. If you are the CEO of a bank and taking home £2m in salary then you pay your 0.1% or whatever rate is set just the same as someone earning £15,000. You are both citizens and donating equally.
     It might provide a positive incentive for all governments to take on tax avoidance as they struggle to think of a way of bringing sanity to the salary structure of those pesky bankers and persuade footballers and showbiz folk to have their paypackets transparent to the HMRC rather than diverted through offshore companies. Parties will discover the joy of payment by results. It would also torpedo the rather absurd notion that you should get paid a levy per vote cast for your party in the last election. This scheme means your support is based on how convincing you are now, not then. This formula would put an end both to the trade union political levy and corporate donations. No other source of party funding would be lawful. Simple.
     The Forsyth formula has the benefit of alliteration though I am willing to share proprietorship with the Scottish Review Rate.

 

John Forsyth has worked for BBC Radio and TV in London and ran his own independent production company in Scotland for 10 years, supplying programmes to BBC Radio 2, 3 4, 5 Live, Radio Scotland and the World Service. He's a former political editor of Scotland on Sunday and is now a freelance journalist and editorial consultant.